Good day, ladies and gentlemen, and welcome to the Third Quarter 2017 Team, Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instruction] As a reminder, this conference maybe recorded. I would now like to turn the conference over to our host of today's call, Mr. Gary Yesavage, you may begin.

Well, good morning. As was stated, my name is Gary Yesavage, and I'm the Interim CEO for Team, Inc. Joining me today is Greg Boane, Executive Vice President and CFO. Purpose of the call today is to update the group on our third quarter earnings, as well as to provide an update on some of the initiatives that we have underway to improve our business. I thought I'd give a brief update to the group since I'm new to many of you, but before I do that, I'd like to thank Ted Owen, the former CEO of Team, Inc. When Ted decided he was going to retire, he called me and asked me to serve as the Interim CEO. I can say that Ted has a deep care and concern for the employees of Team, and really put his heart and soul into his years here at the company. So as I said, Gary Yesavage, chemical engineer by training, right out of college joined Chevron at a refinery we had in New Jersey, spent the next 42 years and nine moves working for Chevron all in the downstream, all in a refinery or a petrochemical plant, has a good fortune of managing four different locations, three chemical plants, and Chevron's 250,000 barrel a day refinery in the Los Angeles Basin, was then asked to move to corporate headquarters and run the global refining system for Chevron. Retired June of 2016, and then was asked to join the Team board in January of this year. So, that's a little bit about me. I'm going to turn it over to Greg, he's going to walk us through the financial results. And I'll be back and share my perspective that I've garnered here over the last seven weeks or so.

Thanks, Gary. Good morning. This call will contain certain forward-looking information within the meaning of the Federal Safe Harbor provisions. Any forward-looking information discussed today is provided in accordance with the Private Securities Litigation Reform Act of 1995. We've made reasonable efforts to ensure that the information, assumptions and beliefs upon which this forward-looking information is based are current, reasonable and complete. However, a variety of factors could cause actual results to differ materially from those anticipated in any forward-looking information. A description of those factors is set forth in the company's SEC filings. There can be no assurance that the forward-looking information discussed today will occur or that our objectives will be achieved. We assume no obligation to publicly update or revise any forward-looking statements made today or any other forward-looking statements made by the company, whether as a result of new information, future events or otherwise. Today's discussions will also include certain non-GAAP financial measures. We've excluded certain items that we believe are not indicative of Team's core operating activities, when arriving at adjusted net income, adjusted EPS, adjusted EBIT, and adjusted EBITDA. All of these are non-GAAP financial measures. Reconciliations of these non-GAAP and adjusted financial measures are provided in the quarterly earnings release. I'll now go over the results for the current quarter and will start off by discussing segment revenue performance before moving onto our consolidated results. TeamQualspec current quarter revenues were $138 million and decreased approximately 3% from third quarter 2016 revenues. TeamFurmanite revenues were $131 million and decreased approximately 1% from third quarter 2016 revenues. Quest Integrity revenues were $16 million and increased approximately 4% in the current quarter versus the prior year quarter. On a consolidated basis, current quarter revenues were $285 million and decreased approximately 2% from third quarter 2016 revenues.…

Thanks, Greg. So, in the seven weeks that I've been on the job, I want to share now my learnings and my observations. My plan coming into the job was to not be a night watchman, not to simply not let anything bad happen, but we've got a lot of work to do and I want to set the new CEO up for success. Focus areas where I'm going to be spending my time are in two major categories, the first is, personnel safety. Unfortunately, Team suffered a fatality back on August 18th. Any organization that has fatalities still has a lot of work to do, and so that is going to be an area of focus for me and obviously our business results are not acceptable. And during my time with my 42 years with Chevron, I learned a lot of management techniques and tools, and I'm trying to bring that to the organization here at Team from my prior experience. So, we – we start – we have started now having monthly business reviews with each of the two Presidents. One session with the inspection side of the shop, and another with mechanical services. This is an opportunity not for folks in the finance organization to answer my questions, but to have the people in the line organization answer my questions about the status of the business. I have asked for and have received a listing of the core performing braches. We had a meeting where the two levels down on the organization, those guys were expected to come in and explain the results, and more importantly, what they were going to do to improve the results. I plan on doing that, those types of reviews branch-by-branch, service line by service line on an ongoing basis. I –…

Our first question comes from Tahira Afzal of KeyBanc. Your line is open.

Hi, folks.

Hello, Tahira.

So Gary, I mean, your message is pretty clear and it's very helpful. The milestones you provided seemed pretty definitive, so thank you for that, to begin with. I guess, my first question is, Ted before leaving gave us an idea of as he looked to restructure what we should be expecting in terms of some headline numbers, and he did mention, let's say, revenues that under the circumstances of, let's say, $1.1 billion in revenue, he still could see based on his restructuring, a business that could deliver sort of 8%, 9% EBITDA margins. I would like to get your point of view on that, if that is still achievable, and if it is, what kind of timeline you see given you are going through a different phase right now?

So Tahira, thank you for the question. So after seven weeks, I can't realistically put a target on what I think our revenue potential is. My efforts, as I mentioned, are really focused right now on the cost and organization side of the business. There are people that are much more familiar with the history of the company, this business sector. My focus, I believe, our costs are too high, and we're going to have to address that first and foremost. And then as I mentioned, I do have concerns about our safety culture. Greg, I don't know if you have anything you'd like to add to that?

Yeah, I would just add that, that we clearly have a goal of restructuring the organization, to move the EBITDA percentage on revenues towards the 10% mark.

Got it. Okay. And Greg, just as a follow-up, I know we go back and forth on G&A. All the numbers you provided were very helpful. But can you give me an idea of what the clean G&A number was in third quarter. And what grade we are expecting with the – roughly that $30 million savings now largely done?

I would say the clean number was around $81 million. And the number I gave for kind of a normalized number for Q4 of $80 million that would have included another month of savings of about $1 million.

Got it, Greg. So Gary and Greg, I mean, as you look forward, and the opportunities you see and as you said it's early – is it largely indirect costs or do we see it in the G&A line as well?

I think, both correct. The approach that Alvarez is taking is they are focusing on all what I would characterize as support costs. Those being operating support costs, as well as corporate support costs. So they've got specific consultants that are assigned to each of those areas and they are drilling into all of the line items spend in those categories to develop a view on what a potential opportunity in both areas might be.

And just to be clear, this is a service company and as a former refiner, if I have a need for a hot tap to be done on an emergency basis or a clamp to be designed, fabricated, installed, I want the supplier to be responsive. And so we're going to need to be aware of both sides that, hey, we do want to make sure we can still service the customer, but do so in the most cost efficient manner possible.

Got it, Gary. And last question from me. Gary, as you are from the industry, the big back and forth we get is the weakness we've been seeing in some of the downstream maintenance, whether that's a new trend going forward, or have things been banded to the point that we are going to see another cycle?

So I think every refining company is going to look at reliability a little differently. I think Chevron is a pretty conservative company. We have two of our largest refineries in the heavily regulated State of California. And so we were going to be very conservative to ensure that we did not have a high consequence loss of containment. I think others are going to have a different perspective. If you want to stay, I think, and be competitive in the refining business, you need to run it reliably. And I think that's what most of our refining customers are looking for is, what is that sweet spot between you want to spend the right amount of money to maintain your facility so that you can run it reliably. Technology is continuing to change. We're smarter about what damage mechanisms are, what type of metallurgy we should be using, inspection techniques are changing. And so our customers are getting smarter not only on use of our product, but they also are getting smarter about what our costs are. And so it's a competitive market. We'll continue to be a competitive market. And I think we're going to have to figure out how we're going to compete in this kind of market.

Got it. Thank you very much, Gary. That's very helpful.

And our next question comes from Martin Malloy of Johnson Rice. Your line is open. Martin W. Malloy - Johnson Rice & Co. LLC: Good morning.

Hello, Marty. Martin W. Malloy - Johnson Rice & Co. LLC: Sounds like you've got a lot on your – it sounds like you've got a lot on your plate, Gary, here. I guess, my first question just on – if you could talk maybe about Team's position in the market, and maybe a little bit about how you think they could be better positioned going forward. And if they're losing any market share, or they have over the past two years, and what can be done to protect their market share. It sounds like you believe that the Quest technology is pretty interesting and a differentiator for Team?

Yeah. So, Marty. Again my take after seven weeks is so Qualspec, what – they perform inspection work with a – the term we use here is nested accounts, where – and I saw this in the Chevron refineries where there were inspectors that work side-by-side with company inspectors. Team's approach was more on a call out basis from a regional office, so when we melded those two together, there really wasn't a lot of direct competition between Qualspec and Team, in my opinion, maybe others that have been around longer might see it differently. Furmanite, on the other hand, was a direct competitor of Team in the mechanical services side and if I'm a refinery manager and I've got two mechanical service contractors, Team and Furmanite, and they overnight become one, well, then I'm looking to qualify a third supplier because I don't want all my eggs in one basket, either from a quality of supply, price of supply, so I would say that there has been some market share loss on the mechanical services side. And I think, that's just when you put two large competitors together from the same space, the customers are going to look to diversify their suppliers, and so I think that has taken place, and I think in combination with that there – refinery turnaround cycles are extremely variable and difficult to forecast. And so I think, we've seen some of that up and down taking place on the inspection side of the shop, I think, on mechanical services side, we have lost some market share. What are we going to do to try to get that back? Well, that comment I mentioned about our ability to streamline the design fabrication and installation of engineered clamps, again as a refinery manager, if a…

So, Marty, our best guesstimate is that the spring turnaround season is going to be stronger than the fall turnaround season. And you know – but there's always a lot of moving parts in turnaround planning and execution. But our overall perspective is positive for the spring turnaround season. Martin W. Malloy - Johnson Rice & Co. LLC: Okay. And then my last question just on the cash flow, the free cash flow generation as we look from 2017 to 2018, you've got the ERP system spending coming down, you've had some spending take place here in 2017 that will result in some cost savings going forward. Could you maybe summarize what the incremental differences we should think about when looking at the cash flow generation from 2017 to 2018?

I mean generally speaking cash flow should trend closely with EBITDA. The problem that we've had over the last 18 months is our EBITDA has been on a declining trend as opposed to an upside trend. We're focused on improving our profitability. We're focused on doing a better job of managing our accounts receivable. We've had a consulting group, is going around some of our branches and taking a look at those that are very good at collections and those that are not as good to come up with a game plan on reducing our DSO. There's so much variability in our quarterly results. We did spend or have spent around $12 million on ERP implementation so far this year. That's obviously a pocket of cash that we would use to pay down debt. But as Gary indicated, we don't have – we're not a backlog driven business. It's really hard to give specificity on projections looking forward. All I can say is that we've got plans in place to improve our cash flow performance and our objective is going to be to utilize that incremental cash to pay down debt. Martin W. Malloy - Johnson Rice & Co. LLC: Okay. Great. Thank you. I'll turn it back.

Thank you, Marty.

And our next question comes from Adam Thalhimer of Thompson Davis. Your line is open. Adam Robert Thalhimer - Thompson Davis & Co., Inc.: Good morning, guys.

Hello, Adam.

Good morning. Adam Robert Thalhimer - Thompson Davis & Co., Inc.: Gary, welcome to the call, and look forward to working with you for least a couple of months -couple of quarters here. First of all, can you give a little more color on the ERP system? I'm curious if you were hoping it was going to give you additional visibility into the business. I'm curious if it's achieving that objective?

I can take a shot at that, Adam, so I can tell you that in the seven weeks that I've been on the job, every time I ask a question, hey, what – can I see the bottom performing branches by EBIT percentage that within 24 hours to 48 hours I've got that answer. And it's laid down the way where I can then follow-up with the responsible line managers to ask even more detailed questions. So, every time I've asked the question, I receive the data in a very timely manner. Adam Robert Thalhimer - Thompson Davis & Co., Inc.: Okay. And then you had a large turnaround booked for Q1 2018. I'm curious if that's still on schedule?

I'm not sure we have anything "booked." There is a large turnaround project in the inspection segment that is in – that is – we're having discussions with the customer and nothing has changed relative to our view that, that should be a large project opportunity for us this spring that we have not had in the last several quarters. Adam Robert Thalhimer - Thompson Davis & Co., Inc.: Okay. And then you talked about the impact on revenue of the hurricanes in Q3. Do you expect it to have a similar impact in Q4?

I don't really think so, Adam. I – there might be some minor carryover, and I know, for example, one of our customers had a turnaround scheduled for fourth quarter. Not in a refinery, not along the Gulf Coast, and when that refinery was impacted at along the Gulf Coast, they pushed that turnaround out from fourth quarter to first quarter next year. So, you'll see some of that moving around, again from my Chevron days, we didn't want to have too large complex turnarounds take place during any one quarter because of the impact on corporate cash flow. And I think our large integrated majors take – our large integrated major customers have a similar approach where, hey, if we can move stuff around to minimize the cash flow impact, let's try to do that as long as we can continue to operate safely and reliably. Adam Robert Thalhimer - Thompson Davis & Co., Inc.: Okay. And I guess the question from me really is if revenue can be up in Q4, given that it would have been up in Q3 ex-hurricanes?

Yes, seasonally Q4 should be up over Q3, because you've got a full turnaround month in October, and potentially strong turnaround activity during the first part of November, which at sometimes can go all the way up to Thanksgiving as opposed to Q3 where you only had September. So, sequentially, we would expect revenues to be up in Q4 just on a normal seasonal basis. Adam Robert Thalhimer - Thompson Davis & Co., Inc.: All right. Then, last, I mean, I'll turn it over, but just curious, what was the impact to margins in the quarter from the storms and what kind of improvement could we see sequentially on the margin front without the storm impact?

The impact on the margins of the $14 million revenue impact was about $7 million. Adam Robert Thalhimer - Thompson Davis & Co., Inc.: Okay. Great. Thanks.

Thank you, Adam.

And our next question comes from Craig Bibb of CJS Securities. Your line is open.

Hi. Good morning. It's Pete Lukas (48:07) for Craig. Just a follow-up question. I think you mentioned that your EBIT margin goals were around 10%. I just want to make sure I understood that correctly, would that be in the current low turnaround environment that those would be the goals and if so what would you expect or like to achieve for a more normal demand year?

I think, big picture we have an overall goal of moving our profit margins up towards 10%. We've been running single digits for quite some time. Our performance improvement, cost reduction initiatives are all with a mindset of getting back to a double-digit profitability, but at this time, we don't have a specific timetable for that because it's too early in the Phase 2 project. We don't have a specific execution plan and timetable laid out, but that was just a general comment about our overall goal to get back to double-digit profitability.

And, Pete, (49:17) I can add that when we did that branch review internally, that was – if you had a branch performing below 10% that was what got you onto the radar screen, my radar screen. And for a branch to say, hey, we'll be above 10% when this particular project goes to the field, having a branch where you're above 10% for one year out of five we have to have a serious internal discussion around the liability of that part of the business. And so we're going to be very focused on those branches that cannot meet that 10% EBIT target.

And so a follow-up, would we expect then, or I guess, you said all things are on the table, so could it be possible we see some more branch consolidation going forward?

All things are on the table.

And last one from me. Furmanite had a much improved Q3 versus Q2. Could you kind of go over what changed, and is that sustainable going forward?

So I would just add, before Greg has something he wants to add as well. But I think we are – we have a collective sense of urgency is that their business results are not acceptable. And as I've mentioned in my comments, there's been a lot of hard work underway, and I don't want to leave you guys with the impression that Alvarez & Marsal is going to be the savior to all of our ills. We've got a lot of work to do and a good portion of that work has been underway and people are making changes and improvements to look at where we could eliminate costs from the business. Greg?

Yeah, I would agree with that. Just generally speaking, there were more moving parts related to the integration of the legacy Team and legacy Furmanite businesses. There is just a little more complexity with respect to their business structure compared to the TeamQualspec segment. And I think that the team there has started to get some traction on their strategic initiatives related to business development, manufacturing efficiency, and other operating performance improvement initiatives. Those things are starting to get some traction on the TeamFurmanite side and that's why we saw some improvement in the third quarter.

Greg, very helpful. Thanks.

Maybe just one more comment, as Greg was talking, it came to my mind. We really did not have a proactive sales approach in our business. We waited for people to call us and then we responded. The guys especially on the mechanical services side have recognized that and are trying to get ourselves, we're hiring people that have sales experience. Again, as I mentioned in my comments, how do we want to go to market? And so I think that effort has been primarily driven by the focus on the mechanical services side. And I think that's part of the reason that we're seeing the revenues tick back up towards where they were historically.

Great. Thank you very much.

Our next question comes from Tom Radionov of Corre Partners. Your line is open.

Hey, guys. Thanks for taking my questions. Gary, I have one for you. So as you were going through this review process with A&M, and at the same time you're looking for a permanent CEO replacement. Just kind of curious, when you hear back from A&M? Are some of the decisions in terms of any incremental cost cuts or anything else on the strategic front going to be made by you or is this something that is more likely to be done by whoever else ends up replacing you at some point down the road?

So Tom, I'm going to need to use my judgment. If I see something that's a no regrets kind of decision, then we're going to go ahead and do it, and we need to improve the performance of our business sooner rather than later. So I don't want to sit and wait until a new person is on board. But if there is something like a complete redesign of the organization, then I would say, hey, we're going to let the new person weigh in on that. But if it's pretty straightforward, hey, we can reduce costs by doing X, then we're going to go ahead and do it.

Okay. Got it. That's helpful. I guess my other question is on your covenant situation. So as you get closer to Q1, it certainly seems possible that you may have to deal with the banks and ask them for some concessions. Have you already started having some of these conversations so you can understand what they may ask you to do or is this something that you're more likely to do towards the end of the year, early next year? And obviously to the extent, you are having conversation just kind of curious for any sort of feedback or thoughts?

We have dialog with the banks throughout the course of the quarter. Our primary point of engagement is with the lead bank and syndicate. We met with them a couple of weeks ago and had some dialog with respect to, what's going on right now, what we're doing relative to the Phase 2 cost reduction program and basically the agreement with them is, is we're going to get back together after the fall turnaround season is completed. At that point, we'll have better information related to how the fall turnaround season ended up. And at that point, we will also have better information relative to the execution plan and timetable and savings opportunities on the Phase 2 program and those two pieces of information would be very, very helpful to the bank in our discussions that we plan to have with them in December of this year.

Got it. It was helpful.

So, okay, Pete, (sic) [Tom] I...

Yeah.

Pete, (sic) [Tom] I was involved in that meeting and it was an opportunity for me to meet the key leaders from that lead bank and we basically went through the same story that we shared with you guys this morning. My personal take was that they were very comfortable with the direction we're taking with respect to an outside perspective coming in and looking at our business or our commitment to follow-up on the findings. My take was that they want to work with us. They like what we're doing, and what I don't want to do is wait till late March and then we're running around. So as Greg mentioned, we met with them in October. We're going to meet with them in early to mid-December, meet again in January and chart our path forward. So that it's transparent as possible, and we're not in a last minute kind of situation running around, trying to make something happen.

Okay, that actually is very helpful color. I appreciate it. And I have one last question. Given October, and obviously, November are very important in terms of your turnaround season. There have been some deferrals outside of the Gulf Coast that others have talked about. What is your experience so far in terms of what you have seen from your customer base vis-à-vis some of these deferrals? And is this something that we should expect to be somewhat meaningful in terms of your overall Q4 performance or are the sort of the – is the impact from those potential deferrals somewhat more benign so far?

Pete, (sic) [Tom] I think you're going to see a mixture of both. Some – yeah, there will be some deferrals. But the example I gave to you about that one Upper Midwest refinery, there will be more spend in the Gulf Coast refineries. And so, any deferral, I think, will be offset by increased work in those facilities that were impacted by floodwaters.

Got it. Okay. Thank you very much, guys. I appreciate it. Good luck.

Thank you.

And I'm showing no further questions at this time. I would now like to turn the conference back over to Gary for closing remarks.

Well, thank you all for your interest and your questions. I can commit to you that we're going to get better. As I mentioned, there is a lot of good people in this organization. The analogy I've been using internally is we've got a lot of really, really good musicians. But we need leadership to orchestrate those musicians, and so we're going to do that. I'm confident that we're going to get better. The time that I'm serving as interim will help me ask better questions when we go through the interviewing process for the permanent CEO. I now have a better feel for what that person – what that person's characteristics and strengths should be. And so I think that will help us make a better decision. I will be a better Board Member as a result of this time in the chair, because I've kind of seen under the tent now and understand where the works are and what we need to do to get better. So, I can tell you that going back to work was not on my bucket list of things to do. But, I have an understanding wife, and I'm going to do the best job I can for however long I'm in this chair. And we will get better on a go forward basis. So, thank you guys for your interest in our business, in our company and we'll talk to you at some point in the future.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day.